Former exec could get jail

Albany man faces up to a year for stealing nearly $12G from employees' retirement savings

By ROBERT GAVIN Staff writer

Published 12:00 am, Monday, September 12, 2011

ALBANY -- Jeffrey W. Bazinet was once a promising software executive in the Capital Region.

But two years after his business went south, he began stealing his former employees' retirement savings without their knowledge.

The 42-year-old Albany man pleaded guilty in May to embezzling nearly $12,000 in 401(k) benefits stolen from four of his ex-employees at Intelligent System Solutions, his former company.

He was scheduled for sentencing Monday in U.S. District Court in Albany, but his attorney asked for a two-week adjournment on the conviction of one count of theft from an employee pension benefit plan.

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When sentenced, Bazinet faces six months to a year behind bars under federal sentencing guidelines. His attorney, Robert Molloy, asked Senior Judge Thomas McAvoy to give Bazinet probation and home detention -- but even the lawyer did not sugarcoat his client's illegal behavior.

"The crime that Jeffrey Bazinet has committed is clearly serious and there is no attempt made to minimize it," Molloy wrote in an Aug. 25 memo to McAvoy. "Jeffrey Bazinet stole retirement savings from former employees and in doing so he jeopardized a portion of their retirement. While on a much smaller scale than some of the more notorious cases in the headlines, Jeffrey Bazinet engaged in the type of act which makes people rightfully concerned about their financial security in retirement."

Court papers show Bazinet, a Watertown native, helped start ISS in August 1995 with a partner identified as Robert Janelli. The outfit, first based in Albany, later moved to Castleton.

In 1998, ISS established a pension benefit plan that allowed employees to contribute to their retirement savings through payroll deductions. Bazinet and Janelli had been co-trustees of the pension plan, but Bazinet became the sole trustee when Janelli left in April 2004.

Two months later, Bazinet filed the last annual report for the pension plan with the state Department of Labor. At the time, the plan had 30 participants and $205,168. By February 2011, the plan had 15 participants with a closing balance of $53,000, court papers show.

Unbeknown to former employees, the plan had fallen prey to a scam.

On four separate occasions between August 2008 and February 2009, Bazinet lied to the custodian of the plan, identified as American Funds. He falsely reported that four employees wanted to close their plans and receive lump sums. All four times, the custodian cut a check -- and mailed it to Bazinet's address.

The total amount scammed was $11,915.

"In each instance, (Bazinet) then took the pension account funds that belonged to his employee and kept them for his own use, depositing the disbursement check into one of his business accounts," his plea agreement stated. "In fact, none of the four employees had requested a distribution, signed any distribution paperwork or had any knowledge of the defendant's actions regarding their pension accounts."

The walls began to close on Bazinet in March 2009. That's when a former employee learned that, without her knowledge, Bazinet had sent a letter to the custodian of the pension plan requesting it be closed out. He also requested a check for $3,371 be sent to his new software business, Cypher Associates, which is now defunct.

After repeated demands, Bazinet paid some of the benefits to two employees -- but he did not pay all the proceeds or interest. And he paid nothing to his two other victims, court papers said.

Under the plea agreement, by the time of his sentencing, Bazinet is expected to reimburse all of the money taken.

In the meantime, Bazinet faces additional legal issues. The father of four children is estranged from his wife, whom he married in 1992. He faces a misdemeanor assault charge for an incident that, according to his attorney, stems from an "altercation between Jeffrey Bazinet and his wife's paramour."

Molloy noted he expects a "favorable disposition" in that case, too late for his federal conviction.

In court papers, Molloy argued Bazinet misappropriated the 401(k) savings to cover payroll in a "misguided attempt" to save his business and jobs of remaining employees.

"Jeffrey Bazinet was embarrassed and ashamed that his business was failing," the lawyer wrote. "His embarrassment led him to commit an act that has destroyed much of his life."